10-Q 1 form10q.htm QUARTERLY REPORT

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-Q

☑  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2022

OR
☐  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ___  to  ___.

Commission file number:  1-14323

ENTERPRISE PRODUCTS PARTNERS L.P.
(Exact Name of Registrant as Specified in Its Charter)

Delaware
 
76-0568219
(State or Other Jurisdiction of Incorporation or Organization)
 
(I.R.S. Employer Identification No.)
 
1100 Louisiana Street, 10th Floor
Houston, Texas 77002
    (Address of Principal Executive Offices, including Zip Code)
(713) 381-6500
(Registrant’s Telephone Number, including Area Code)

Securities registered pursuant to Section 12(b) of the Securities Exchange Act of 1934:

Title of Each Class
Trading Symbol(s)
Name of Each Exchange On Which Registered
Common Units
EPD
New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.   Yes ☑  No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).  Yes ☑   No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company.  See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer ☑
Accelerated filer ☐
Non-accelerated filer   ☐
Smaller reporting company ☐
Emerging growth company   ☐
  

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐   

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).   Yes ☐   No ☑ 

There were 2,179,249,380 common units of Enterprise Products Partners L.P. outstanding at the close of business on July 29, 2022. 


ENTERPRISE PRODUCTS PARTNERS L.P.
TABLE OF CONTENTS

 
 
Page No.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  

1


PART I.  FINANCIAL INFORMATION.

ITEM 1.  FINANCIAL STATEMENTS.

ENTERPRISE PRODUCTS PARTNERS L.P.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in millions)

   
June 30,
2022
    
December 31,
2021
  
ASSETS
            
Current assets:
            
Cash and cash equivalents
  
$
231
    
$
2,820
  
Restricted cash
    
166
      
145
  
Accounts receivable – trade, net of allowance for credit losses
of $54 at June 30, 2022 and $53 at December 31, 2021
    
8,421
      
6,967
  
Accounts receivable – related parties
    
29
      
21
  
Inventories (see Note 3)
    
3,234
      
2,681
  
Derivative assets (see Note 14)
    
332
      
237
  
Prepaid and other current assets
    
548
      
399
  
Total current assets
    
12,961
      
13,270
  
Property, plant and equipment, net (see Note 4)
    
44,129
      
42,088
  
Investments in unconsolidated affiliates (see Note 5)
    
2,374
      
2,428
  
Intangible assets, net (see Note 6)
    
4,056
      
3,151
  
Goodwill (see Note 6)
    
5,608
      
5,449
  
Other assets
    
1,222
      
1,140
  
Total assets
  
$
70,350
    
$
67,526
  
 
                
LIABILITIES AND EQUITY
                
Current liabilities:
                
Current maturities of debt (see Note 7)
  
$
1,889
    
$
1,400
  
Accounts payable – trade
    
803
      
632
  
Accounts payable – related parties
    
132
      
167
  
Accrued product payables
    
10,815
      
8,093
  
Accrued interest
    
435
      
453
  
Derivative liabilities (see Note 14)
    
345
      
254
  
Other current liabilities
    
559
      
626
  
Total current liabilities
    
14,978
      
11,625
  
Long-term debt (see Note 7)
    
26,892
      
28,135
  
Deferred tax liabilities (see Note 16)
    
556
      
518
  
Other long-term liabilities
    
898
      
760
  
Commitments and contingent liabilities (see Note 17)
    
     
 
Redeemable preferred limited partner interests: (see Note 8)
                
    Series A cumulative convertible preferred units (“preferred units”)
        (50,412 units outstanding at June 30, 2022 and December 31, 2021)
    
49
      
49
  
Equity: (see Note 8)
                
Partners’ equity:
                
Common limited partner interests (2,179,249,380 units issued and outstanding at
     June 30, 2022, 2,176,379,587 units issued and outstanding at December 31, 2021)
    
27,003
      
26,340
  
Treasury units, at cost
    
(1,297
)
    
(1,297
)
Accumulated other comprehensive income
    
177
      
286
  
Total partners’ equity
    
25,883
      
25,329
  
Noncontrolling interests in consolidated subsidiaries
    
1,094
      
1,110
  
Total equity
    
26,977
      
26,439
  
Total liabilities, preferred units, and equity
  
$
70,350
    
$
67,526
  


See Notes to Unaudited Condensed Consolidated Financial Statements.
2


ENTERPRISE PRODUCTS PARTNERS L.P.
UNAUDITED CONDENSED STATEMENTS OF CONSOLIDATED OPERATIONS
 (Dollars in millions, except per unit amounts)

 
  
For the Three Months
Ended June 30,
    
For the Six Months
Ended June 30,
  
 
  
2022
    
2021
    
2022
    
2021
  
Revenues:
                        
Third parties
  
$
16,041
    
$
9,441
    
$
29,033
    
$
18,582
  
Related parties
    
19
      
9
      
35
      
23
  
Total revenues (see Note 9)
    
16,060
      
9,450
      
29,068
      
18,605
  
Costs and expenses:
                                
Operating costs and expenses:
                                
Third party and other costs
    
14,004
      
7,767
      
25,086
      
14,996
  
Related parties
    
337
      
300
      
652
      
624
  
Total operating costs and expenses
    
14,341
      
8,067
      
25,738
      
15,620
  
General and administrative costs:
                                
Third party and other costs
    
24
      
19
      
49
      
40
  
Related parties
    
38
      
33
      
75
      
68
  
Total general and administrative costs
    
62
      
52
      
124
      
108
  
Total costs and expenses (see Note 10)
    
14,403
      
8,119
      
25,862
      
15,728
  
Equity in income of unconsolidated affiliates
    
107
      
161
      
224
      
310
  
Operating income
    
1,764
      
1,492
      
3,430
      
3,187
  
Other income (expense):
                                
Interest expense
    
(309
)
    
(316
)
    
(628
)
    
(639
)
Interest income
    
2
      
1
      
3
      
2
  
Other, net
    
–
      
–
      
2
      
–
  
Total other expense, net
    
(307
)
    
(315
)
    
(623
)
    
(637
)
Income before income taxes
    
1,457
      
1,177
      
2,807
      
2,550
  
Provision for income taxes (see Note 16)
    
(17
)
    
(31
)
    
(36
)
    
(41
)
Net income
    
1,440
      
1,146
      
2,771
      
2,509
  
Net income attributable to noncontrolling interests
    
(28
)
    
(33
)
    
(62
)
    
(54
)
Net income attributable to preferred units
    
(1
)
    
(1
)
    
(2
)
    
(2
)
Net income attributable to common unitholders
  
$
1,411
    
$
1,112
    
$
2,707
    
$
2,453
  
 
                                
Earnings per unit: (see Note 11)
                                
Basic and diluted earnings per common unit
  
$
0.64
    
$
0.50
    
$
1.23
    
$
1.11
  













See Notes to Unaudited Condensed Consolidated Financial Statements.
3



ENTERPRISE PRODUCTS PARTNERS L.P.
UNAUDITED CONDENSED STATEMENTS OF CONSOLIDATED
COMPREHENSIVE INCOME
(Dollars in millions)

 
  
For the Three Months
Ended June 30,
    
For the Six Months
Ended June 30,
  
 
  
2022
    
2021
    
2022
    
2021
  
 
                        
Net income
  
$
1,440
    
$
1,146
    
$
2,771
    
$
2,509
  
Other comprehensive income (loss):
                                
Cash flow hedges: (see Note 14)
                                
Commodity hedging derivative instruments:
                                
Changes in fair value of cash flow hedges
    
39
      
(291
)
    
(60
)
    
(752
)
Reclassification of losses (gains) to net income
    
(108
)
    
(99
)
    
(63
)
    
517
  
Interest rate hedging derivative instruments:
                                
Changes in fair value of cash flow hedges
    
–
      
–
      
–
      
183
  
Reclassification of losses to net income
    
6
      
10
      
14
      
18
  
Total cash flow hedges
    
(63
)
    
(380
)
    
(109
)
    
(34
)
Total other comprehensive loss
    
(63
)
    
(380
)
    
(109
)
    
(34
)
Comprehensive income
    
1,377
      
766
      
2,662
      
2,475
  
Comprehensive income attributable to noncontrolling interests
    
(28
)
    
(33
)
    
(62
)
    
(54
)
Comprehensive income attributable to preferred units
    
(1
)
    
(1
)
    
(2
)
    
(2
)
Comprehensive income attributable to common unitholders
  
$
1,348
    
$
732
    
$
2,598
    
$
2,419
  
  


























See Notes to Unaudited Condensed Consolidated Financial Statements.

4



ENTERPRISE PRODUCTS PARTNERS L.P.
UNAUDITED CONDENSED STATEMENTS OF CONSOLIDATED CASH FLOWS
(Dollars in millions)

 
  
For the Six Months
Ended June 30,
  
 
  
2022
    
2021
  
Operating activities:
            
Net income
  
$
2,771
    
$
2,509
  
Reconciliation of net income to net cash flows provided by operating activities:
                
Depreciation and accretion
    
891
      
852
  
Amortization of intangible assets
    
86
      
74
  
Amortization of major maintenance costs for reaction-based plants
    
25
      
10
  
Other amortization expense
    
115
      
123
  
Impairment of assets other than goodwill
    
19
      
84
  
Equity in income of unconsolidated affiliates
    
(224
)
    
(310
)
Distributions received from unconsolidated affiliates attributable to earnings
    
224
      
262
  
Net losses attributable to asset sales and related matters
    
2
      
11
  
Deferred income tax expense
    
16
      
24
  
Change in fair market value of derivative instruments
    
94
      
(39
)
Non-cash expense related to long-term operating leases (see Note 17)
    
27
      
19
  
Net effect of changes in operating accounts (see Note 18)
    
218
      
399
  
Other operating activities
    
–
      
(1
)
Net cash flows provided by operating activities
    
4,264
      
4,017
  
Investing activities:
                
Capital expenditures
    
(731
)
    
(1,301
)
Cash used for business combinations, net of cash received (See Note 12)
    
(3,204
)
    
–
  
Investments in unconsolidated affiliates
    
–
      
(1
)
Distributions received from unconsolidated affiliates attributable to the return of capital
    
55
      
37
  
Proceeds from asset sales
    
14
      
50
  
Other investing activities
    
(2
)
    
(14
)
Cash used in investing activities
    
(3,868
)
    
(1,229
)
Financing activities:
                
Borrowings under debt agreements
    
42,112
      
9,797
  
Repayments of debt
    
(42,872
)
    
(11,122
)
Monetization of interest rate derivative instruments
    
–
      
75
  
Cash distributions paid to common unitholders (see Note 8)
    
(2,026
)
    
(1,965
)
Cash payments made in connection with distribution equivalent rights
    
(17
)
    
(15
)
Cash distributions paid to noncontrolling interests
    
(82
)
    
(71
)
Cash contributions from noncontrolling interests
    
4
      
18
  
Repurchase of common units under 2019 Buyback Program
    
(35
)
    
(14
)
Other financing activities
    
(48
)
    
(38
)
Cash used in financing activities
    
(2,964
)
    
(3,335
)
Net change in cash and cash equivalents, including restricted cash
    
(2,568
)
    
(547
)
Cash and cash equivalents, including restricted cash, at beginning of period
    
2,965
      
1,158
  
Cash and cash equivalents, including restricted cash, at end of period
  
$
397
    
$
611
  









See Notes to Unaudited Condensed Consolidated Financial Statements.
5



ENTERPRISE PRODUCTS PARTNERS L.P.
UNAUDITED CONDENSED STATEMENTS OF CONSOLIDATED EQUITY
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2022
(Dollars in millions)

 
  
Partners’ Equity
              
   
Common
Limited
Partner
Interests
    
Treasury
Units
    
Accumulated
Other
Comprehensive
Income (Loss)
    
Noncontrolling
Interests in
Consolidated
Subsidiaries
    
Total
  
For the Three Months Ended June 30, 2022:
                              
     Balance, March 31, 2022
  
$
26,610
    
$
(1,297
)
  
$
240
    
$
1,104
    
$
26,657
  
   Net income
    
1,411
      
–
      
–
      
28
      
1,439
  
   Cash distributions paid to common unitholders
    
(1,014
)
    
–
      
–
      
–
      
(1,014
)
   Cash payments made in connection with
      distribution equivalent rights
    
(9
)
    
–
      
–
      
–
      
(9
)
   Cash distributions paid to noncontrolling interests
    
–
      
–
      
–
      
(40
)
    
(40
)
   Cash contributions from noncontrolling interests
    
–
      
–
      
–
      
2
      
2
  
   Amortization of fair value of equity-based awards
    
41
      
–
      
–
      
–
      
41
  
   Repurchase and cancellation of common units under
      2019 Buyback Program
    
(35
)
    
–
      
–
      
–
      
(35
)
   Cash flow hedges
    
–
      
–
      
(63
)
    
–
      
(63
)
   Other, net
    
(1
)
    
–
      
–
      
–
      
(1
)
     Balance, June 30, 2022
  
$
27,003
    
$
(1,297
)
  
$
177
    
$
1,094
    
$
26,977
  



 
  
Partners’ Equity
              
   
Common
Limited
Partner
Interests
    
Treasury
Units
    
Accumulated
Other
Comprehensive
Income (Loss)
    
Noncontrolling
Interests in
Consolidated
Subsidiaries
    
Total
  
For the Six Months Ended June 30, 2022:
                              
     Balance, December 31, 2021
  
$
26,340
    
$
(1,297
)
  
$
286
    
$
1,110
    
$
26,439
  
   Net income
    
2,707
      
–
      
–
      
62
      
2,769
  
   Cash distributions paid to common unitholders
    
(2,026
)
    
–
      
–
      
–
      
(2,026
)
   Cash payments made in connection with
      distribution equivalent rights
    
(17
)
    
–
      
–
      
–
      
(17
)
   Cash distributions paid to noncontrolling interests
    
–
      
–
      
–
      
(82
)
    
(82
)
   Cash contributions from noncontrolling interests
    
–
      
–
      
–
      
4
      
4
  
   Amortization of fair value of equity-based awards
    
79
      
–
      
–
      
–
      
79
  
   Repurchase and cancellation of common units under
      2019 Buyback Program
    
(35
)
    
–
      
–
      
–
      
(35
)
   Cash flow hedges
    
–
      
–
      
(109
)
    
–
      
(109
)
   Other, net
    
(45
)
    
–
      
–
      
–
      
(45
)
     Balance, June 30, 2022
  
$
27,003
    
$
(1,297
)
  
$
177
    
$
1,094
    
$
26,977
  














See Notes to Unaudited Condensed Consolidated Financial Statements.  For information regarding Unit History and
Accumulated Other Comprehensive Income (Loss), see Note 8.
6


ENTERPRISE PRODUCTS PARTNERS L.P.
UNAUDITED CONDENSED STATEMENTS OF CONSOLIDATED EQUITY
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2021
(Dollars in millions)

 
  
Partners’ Equity
              
   
Common
Limited
Partner
Interests
    
Treasury
Units
    
Accumulated
Other
Comprehensive
Income (Loss)
    
Noncontrolling
Interests in
Consolidated
Subsidiaries
    
Total
  
For the Three Months Ended June 30, 2021:
                              
     Balance, March 31, 2021
  
$
26,109
    
$
(1,297
)
  
$
181
    
$
1,078
    
$
26,071
  
   Net income
    
1,112
      
–
      
–
      
33
      
1,145
  
   Cash distributions paid to common unitholders
    
(983
)
    
–
      
–
      
–
      
(983
)
   Cash payments made in connection with
      distribution equivalent rights
    
(8
)
    
–
      
–
      
–
      
(8
)
   Cash distributions paid to noncontrolling interests
    
–
      
–
      
–
      
(41
)
    
(41
)
   Cash contributions from noncontrolling interests
    
–
      
–
      
–
      
5
      
5
  
   Amortization of fair value of equity-based awards
    
41
      
–
      
–
      
–
      
41
  
   Cash flow hedges
    
–
      
–
      
(380
)
    
–
      
(380
)
   Other, net
    
(2
)
    
–
      
–
      
(1
)
    
(3
)
     Balance, June 30, 2021
  
$
26,269
    
$
(1,297
)
  
$
(199
)
  
$
1,074
    
$
25,847
  



 
  
Partners’ Equity
              
   
Common
Limited
Partner
Interests
    
Treasury
Units
    
Accumulated
Other
Comprehensive
Income (Loss)
    
Noncontrolling
Interests in
Consolidated
Subsidiaries
    
Total
  
For the Six Months Ended June 30, 2021:
                              
     Balance, December 31, 2020
  
$
25,767
    
$
(1,297
)
  
$
(165
)
  
$
1,073
    
$
25,378
  
   Net income
    
2,453
      
–
      
–
      
54
      
2,507
  
   Cash distributions paid to common unitholders
    
(1,965
)
    
–
      
–
      
–
      
(1,965
)
   Cash payments made in connection with
      distribution equivalent rights
    
(15
)
    
–
      
–
      
–
      
(15
)
   Cash distributions paid to noncontrolling interests
    
–
      
–
      
–
      
(71
)
    
(71
)
   Cash contributions from noncontrolling interests
    
–
      
–
      
–
      
18
      
18
  
   Amortization of fair value of equity-based awards
    
79
      
–
      
–
      
–
      
79
  
   Repurchase and cancellation of common units under
      2019 Buyback Program
    
(14
)
    
–
      
–
      
–
      
(14
)
   Cash flow hedges
    
–
      
–
      
(34
)
    
–
      
(34
)
   Other, net
    
(36
)
    
–
      
–
      
–
      
(36
)
     Balance, June 30, 2021
  
$
26,269
    
$
(1,297
)
  
$
(199
)
  
$
1,074
    
$
25,847
  








See Notes to Unaudited Condensed Consolidated Financial Statements. For information regarding Unit History and
Accumulated Other Comprehensive Income (Loss), see Note 8.
7

ENTERPRISE PRODUCTS PARTNERS L.P.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

KEY REFERENCES USED IN THESE
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Unless the context requires otherwise, references to “we,” “us” or “our” within these Notes to Unaudited Condensed Consolidated Financial Statements are intended to mean the business and operations of Enterprise Products Partners L.P. and its consolidated subsidiaries.  

References to the “Partnership” or “Enterprise” mean Enterprise Products Partners L.P. on a standalone basis.

References to “EPO” mean Enterprise Products Operating LLC, which is an indirect wholly owned subsidiary of the Partnership, and its consolidated subsidiaries, through which the Partnership conducts its business.  We are managed by our general partner, Enterprise Products Holdings LLC (“Enterprise GP”), which is a wholly owned subsidiary of Dan Duncan LLC, a privately held Texas limited liability company.

The membership interests of Dan Duncan LLC are owned by a voting trust, the current trustees (“DD LLC Trustees”) of which are: (i) Randa Duncan Williams, who is also a director and Chairman of the Board of Directors (the “Board”) of Enterprise GP;  (ii) Richard H. Bachmann, who is also a director and Vice Chairman of the Board of Enterprise GP; and (iii) W. Randall Fowler, who is also a director and the Co-Chief Executive Officer and Chief Financial Officer of Enterprise GP.  Ms. Duncan Williams and Messrs. Bachmann and Fowler also currently serve as managers of Dan Duncan LLC.

References to “EPCO” mean Enterprise Products Company, a privately held Texas corporation, and its privately held affiliates.  The outstanding voting capital stock of EPCO is owned by a voting trust, the current trustees (“EPCO Trustees”) of which are: (i) Ms. Duncan Williams, who serves as Chairman of EPCO; (ii) Mr. Bachmann, who serves as the President and Chief Executive Officer of EPCO; and (iii) Mr. Fowler, who serves as an Executive Vice President and the Chief Financial Officer of EPCO.  Ms. Duncan Williams and Messrs. Bachmann and Fowler also currently serve as directors of EPCO.

We, Enterprise GP, EPCO and Dan Duncan LLC are affiliates under the collective common control of the DD LLC Trustees and the EPCO Trustees.  EPCO, together with its privately held affiliates, owned approximately 32.2% of the Partnership’s common units outstanding at June 30, 2022.

With the exception of per unit amounts, or as noted within the context of each disclosure,
the dollar amounts presented